tv Bloomberg Best Bloomberg October 22, 2016 8:00am-9:01am EDT
ix: big bang's headline a big week for corporate beatsgs, but do their leads to a turnaround in the sector? from saudi bonds to russian oil to italian banks. to the latest data from china. we will move fro through all the news. the bond issuance is very much like an ipo. with plus, a conversation brian moynihan and michael dell.
regulate the banks and create barriers to the free flow of capital. >> we feel good about the u.s. >> we see plenty of art organically to consolidate. opportunity organically to consolidate. alix: it's all ahead on "bloomberg best." several major investment banks released earnings this week. with the sector coming up a string of lackluster quarters, people watched anxiously -- >> bank of america reporting for quarter earnings that beat
analyst estimates -- >> you saw them post better-than-expected bond trading revenue. at jpr to what you saw and citi they are not as big in the macro products that had such a good quarter. this was a bit of a surprise to the upside. given the results. >> we are seeing a pattern here. they seem to be surging back. will have to get in the quarter of data before we call it a rebound. it's been good for one or two months, certainly this is more than that, this is the best it's been in a while. investors will want to see a couple quarters of sustainability on this front. out withdman sachs
third quarter earnings putting a 47% rise in profits from bond trading. net income rose to $2 billion. >> a 49% increase from revenue from fixed income trading. goldman has been known for a long time as a bond trading shop. they have a lot of money from acquisition trading as well. it's something where they really need that kind of revenue. you can't discount anything where they have a bad quarter for bond trading and in a bad quarter overall. this quarter, we saw an amazing rise, 49%, huge for them. we more than we had four analyst expectations -- from analyst expectations. you saw more client activity,
people positioning around their views on race, people positioning around their views on credit that you had a better quarter. that could go a long way for goldman. >> the chinese economy remain target putting the gdp within sight. >> in line with those forecasts. thet in the middle of target range of 6.5-7 percent for the end of the are. oft gives policymakers a bit wiggle room, space to tackle those debt problems and pump in credit. china's policymakers now have a bit of time in which they can start making some of the painful
changes which needed to prop up stability in the financial sector and to rebalance the economy away from the state enterprises, a larger role for the private sector. the question is how much progress they will be able to make on those needed but painful reforms. alix: morgan stanley reporting third-quarter earnings, a 57% rise in profit as fixed income trading -- >> equities trading come everything to do with revenue, all the things looking really good. investment banking is a really important business, as well as wealth management. it's a good beat overall. delve into the numbers a bit further, i was looking at our lead earlier -- the return on
equity at 9-11% is the target. they came in under that at 8.7%. still something they need to do better on. jon: the median estimate is for rates to remain unchanged. they come through right now unchanged at zero. no big surprise. no change on interest rates, no change in qe. scheduled to go to march 2017. or beyond if needed. the big question is if it's needed. the big take away is what they did not discuss common extension of qe beyond march. tapering.ot discuss the market wondering what they did discuss. >> they discussed where we are,
progress, couple of interesting points right in the statement. growth, they still see downside risks. -- ation very important reminder that puts the qe discussion into context. despite headline inflation picking up because of the country vision from energy prices, there is no convincing evidence that underlying inflation is on an upswing. my main take away is nothing at this stage. we will wait for the projection. december is where we will discuss. the eu summit is wrapping up in brussels. canadian trade minister says it looks like a trade agreement with the eu collapsed, calling it impossible. what's going on with canada?
>> this is the elephant in the room. what percent of the eu population -- 1% of the eu population blocking the canadian trade deal with the eu. eu. the canadian trade minister has decided to walk out of these talks, calling the trade deal impossible, saying it's clear the eu at the moment is not capable of negotiating an agreement with a country that actually has european value, such as canada. >> what about brexit and theresa may? that's she seem optimistic that any deals could get done? >> this is a bit of a warning for theresa may. mark ons a question
what kind of trade deal she will be able to negotiate with the eu. >> i'm optimistic we can achieve a deal. the deal that is right for the u.k. will also be right for the european union. alix: we will run through more of the key earnings reports. we also sat down with two of the worlds most powerful ceos. brian moynihan and michael dell. straight ahead, we have more top business headlines, including a bloomberg scoop. apple putting the brakes on its project to develop a self driving car. ♪
alix: this isalix: "bloomberg best." let's continue our global tour of the week's top business stories in italy. any have been calling for bank consolidation. a long-awaited merger finally went through on monday. >> let's talk about italy now. have backedolders the merger. 's bigal marks the nations
win. >> the first merger in almost a decade. if this deal had not gone through, it would not have been a boat of confidence in italy's banking industry. which is already suffering under the weight of 300 billion euros of bad loans. the bare minimum that was needed to restore some confidence in this industry right now. >> how frail are italy's banks? if we don't have resolution for the other banks, do you think you are share price will suffer as a result of investors also discounting you guys? >> yes. was really approval important, not only for our banks and shareholders, but also to show a signal to foreign toestors that it's possible
have consolidation and growth in italy without resolution. all the other transactions will go ahead with more confidence. if these can be solved in the next few months, i'm sure investors will come back to -- come backy to to italy and try to invest in a sector that has tangible value that is very low. biggest dust buying srinto dust oi. italy, buyingnto sr oil. a company owned
them.it's a big one for india is emerging as an important oil producer. important stuff for india. group fromor the sr a deleveraging standpoint. is dramatically scaling back its ambitions to take on detroit. gave a team of engineers the approval to build a car. going straight after detroit and tesla.ight after th there's been a change in direction. apple has put on hold plans to build a car and instead create a self driving system that could be marketed to other carmakers. matt: could they work with ford?
>> if possible. it is still in the early innings. at the end of next year around the fall of 2017, apple will decide what to do. nibble at about a weight the progress of the self driving platform. they will about await the progress of the self driving platform. delivering anion upside surprise today. fueled by a plunging pound. what you've seen is fuel prices falling in comparison. it's nothing to do with domestically generated inflation. they'd seen another pickup in closing costs. that's listed as the core rate and headline rate.
that could balance out next month. inflation is set to rise. the sterling exchange rate will push up on that in months to come. a saudi arabia going on selling spree -- looking to batteredey after finances -- $67 billion. bloomberg has learned a large portion of the saudi bond orders have come from the united states. phase,ng the roadshow saudi arabia went to the u.s. and london. they did not go to asia. that's how confident thinking them was of securing a sizable backstop for this issue in the
asian market. alix: paying above the u.s. benchmark rate for the five-year my tenure bonds. >> the economy is based on oil. this is a first up and a very aggressive step into diversifying out of the oil space and the bonds themselves just a paint for the ipo for saudi aramco that the saudi's will ultimately go to to increase their capitalization of the oil asset. matt: yahoo! earnings popping across the bloomberg here. third-quarter adjusted eps was $.20. we were looking for $.14. the number will be beating analyst estimates.
they don't really matter that much. the only thing that matters for yahoo! is whether or not verizon still wants to take $4.8 billion y's web assets. '00 million customers information was hacked. buy thistill want to company, but they want to know what they are buying. the question for the lawyers to decide, is this hacking a material adverse change to the company? that's where we are now. providethis incident verizon with a pretext to walk away? >> when the lawyers get together, is this hacking issue and the disclosure of it a material adverse change to
yahoos business such that it would affect the value of the transaction? >> you love musk on the road to economists. he plans to equip all new tesla cars with the hardware needed for full salt driving capacity. -- self driving capacity. going from one camera per cartoon now eight of them, including three facing forward to now eight of them. 40 trillion decisions per second. a pretty amazing thing. they are adding all this hardware and software into these cars. you cannot use this stuff. most of us are not allowed to let our car do the driving force. that? how does he pay for >> we will see.
when he said they weren't going to need more capital this quarter, presumably he already knew he was undertaking this and adding these expenses. possibly a positive sign. >> senior executives at at&t and time warner have been meeting in recent weeks and discussing berry is business strategies, including a possible merger. -- various business strategies. matt: how far along are we in these talks? >> no banks have been hired yet. talk.s senior executive -- it have been discussed would be a very large deal. they bought directv not too long ago.
shavingillion u.s. industry has undergone plenty of disruption. still dominates in retail sales but online sales now account for about 10% of the market. one reason unilever bought club -- other young companies are growing fast as the shaving lanc landscape shifts. >> we felt like the big brands have forgotten about the customer. we had this vision for really changing the experience around shaving for guys everywhere. we make our own products. razors, razorn blades and shave gels and creams and we deliver them at amazing value by selling directly on our website.
with the first things we realized was we had to make amazing razor blades. how hard could it be? you take metal and plastic and put it together. we could not have been more wrong. we spent six months trying to figure out everything about razor blades. how they are made, where they are made and what the magic is this -- we found a bactrian germany that made the best place in the world. we lost a partnership with them -- without a factory in germany -- we found a factory in germany that made the best razors in the world. we launched a partnership with them. million tover $100 buy the factory in germany. stars every lucky
day -- when we were learning about shaving, we went and learn from barbers. we found a barbershop that is only two chairs. foremost world's experts on shaping and grooming. we should innovate in the way are customers want. that's our customers want. in shaving, there's one large company. gillette controls the entire market. we don't know if we will be the biggest shaving company in the market someday. we are only a three-year-old company. that isto build a brand around for a long time. whether that is a standalone company or a privately owned company, we don't know.
a are trying to find structure that helps us achieve our vision for the long-term. still to come, companies around the world reporting earnings this week. we will sort through the numbers and dig into what they mean for the markets. of next, some of the week's best interviews featuring exclusive conversations with brian moynihan and michael dell. >> your time horizon is very different. alix: this is bloomberg. ♪
>> let's talk about brexit. banks likeeful that yourself will have access to the single you market -- you market -- eu market? >> the g-20 recognize they needed to reregulate the banking industry globally. it's been a heavy lift by everyone since the financial crisis. the other important thing the g-20 said was let's not reregulate the banks and create barriers to the free flow of capital. whether it's the flow of capital from singapore to china or from paris to london or vice versa, both the eu, the uk and the rest
of the major financial centers will stay connected to this. let's let capital flow freely. there will be some changes because of the brexit vote. the fundamental global financial market will be preserved. >> we saw inflation double last month. what do you expect the bank of england to do in the coming months and into 2017? >> we pick up 60% of the payment flows and u.k. everyday. we saw in september and august was consumer spending in the u.k. has grown 4% plus versus last year. pretty robust number. a reduction by the bank of from 50 basis points to 25 basis points was the right thing. that was the barclays ceo
speaking with bloomberg and singapore. barclays expected to report third-quarter earnings next week. this week, bank of america chairman and ceo brian moynihan saw his bank beat expectations on third-quarter profit. he discussed the state of banking in an exclusive interview with erik schatzker. revenue has been dropping, regulation has been increasing. the only way to boost profit has been by slashing costs. where are we now? have we bottomed or is there further to drop in this industry? >> coming up the highs in the revenue basis, you probably bottomed. , our costsast year went down 3%. growthcremental revenue
in an environment that is growing 1.5%. technology,g replacing paper with digital. that can go on for a long time. the 20 billion a year we took out is really driven by a need to really move the cost structure. erik: the economy does remain a question mark. loan demand can be a leading indicator. what is it telling you? >> the thing about the u.s. economy, it's driven by consumers. the most consumer-oriented economy in the world. consumption is big. our customer base is spending 5% more than they spent last year. k: the 1.5% economic growth
environment will accelerate? >> what's going on with companies and things like that. here, they are basically a little bit better than that. last year, they were a little higher. i think there estimates are on par with how we are going now. we don't see a lot of disruption in that. we don't see what is going to drive up the growth rates. it is taking time. importantly, as the stimulus comes out and getting the economy on the footing, it is taking time. it is fine. the economy is growing. we feel good about the u.s. alix: erik schatzker also travel to austin, texas, with an exclusive interview with the founder of hell. -- dell.
he asked if there are more acquisitions in mind. he brings his answer in dramatic terms. >> if you think about this as a iny, act i was go private 2013. back to is the combination of dell in 2016. you are asking about act 3. >> how long will we have to wait and see? >> we have a few minds -- ideas in mind. on all the great things we're doing for customers. love, we see plenty of opportunity organically to consolidate. we will consider acquisitions. alliances and partnerships are also important. we also have our ventures program where we are investing in hundreds of the companies
that are 24 months out in terms of the future. theou have the desire and financial capacity to do those things. >> we do. yes. >> you have talked about the benefits of being private. not having a publicly traded -- >> we have to public companies. >> that is right. buying emc is a risk that few public companies could have taken. i'm wondering about now. now that you emc and most of vmware, what kind of risks can you afford to take? >> as a privately controlled company, your time horizon is very different. start -- you reimagine your business and think about your business in years and decades.
it allows you to reconceptualize how you are investing and what the real priorities are. as dell, that in 2013 we had pretty outstanding results. i'm talking about cash flow by the way in terms of results. standpoint,t share we grew our share in all of our seed markets even if the markets were shrinking. we were growing our shares and generating strong cash flows. dellou reimagine emc plus as a privately controlled company with a long-term time ofizon, it frees up a lot time and allows us to have a much different respective on our business. ♪
♪ alix: you are watching "bloomberg best." let's get back to earnings. quarterly reports came fast and furious starting monday when that lets an ibm released results after the bell. 20% onlix shares surging better-than-expected scriber growth. they reported adding requests 6 million subscribers in the third quarter with new series credited for gaining new subscribers. they say they will produce 1000 hours of original programming next year, up from 600 hours this year. eloquent does this get to expensive? >> if i were an investor, it is
already too expensive. the fact is it is a good media company that happens to distribute content over the internet. i don't believe it is a go to the moon company. it is a fortunate company that has grouped itself along with the internet community that has gained value for being grouped with these companies. >> how do you respond to that? >> the question is how do they spend the money. if they just go for more hours, that will fall apart. we don't need more clutter in a video environment. that is the risk. analysteating estimates, beating $19.3 billion revenue. ibm is seeing double-digit growth and its strategic imperatives, in other words revenue coming from artificial intelligence, data alex, cloud
computing, and security. tell us the good and the bad here? >> you have to get this company credit. this company has been on a long-term multiyear transformation. we are now seeing really good progress of that. would people like to have seen a little more revenue growth, absolutely. margins took a hit. 40% of the company's revenue is now associated with strategic imperatives. they are making progress. you can see that in the numbers. particularly sustained 15% growth, in a nutshell, that is progress. they deserve to be commended. >> we are getting numbers coming through. 10%, net cashn by at the end of the third quarter at 20 million pounds.
the headcount was up 2% year on year. >> i think outside the u.k. everything continues to be strong. we had an all-time record in germany, and all-time record in france. europe on the back of not a lot of economic growth is a combination of businesses and people getting on with their lives. we have always said there is a lot of structural growth opportunity. on the other end of the world, are third-largest business has real positives there. america is looking good. going back to the u.k. -- in this quarter, the day after brexit -- johnson raise profit forecasts after beating estimates on strong drug sales. strong salese very growth of 4%, and 5.9% growth as
products continue. that is very strong. growth atg earnings 12.8%. that is primarily driven by our pharmaceutical business. the breadth of the business he was positive results and confidence that we will end the year and a nice place. >> intel shares are slipping in after-hours trading. they beat on revenue, but they missed estimates. it may indicate slower pc demand and that manufacturers will again sit on a stockpile of chips. >> the pc segment is the largest piece of our revenue. market're seeing is strength particularly in business pcs and customers starting to put a little more inventory in places anticipate
sales in the fourth quarter. in the fourth quarter, we are expecting a kind of normal market. we think some of that inventory gets consumed so we have a little below seasonable q4 and a much stronger second half than what we thought. 80% in the more than first nine months of the year due to rising costs. >> keeping up with its local rivals. >> why are these costs climbing so fast? >> they have to keep up with china mobile. they need to upgrade their network network -- 4g to keep subscribers from moving away. they have been successful in getting new subscribers which handsetp the cost for subsidies. this pushes costs up. >> will that pay off?
>> it well. one reason they are subsidizing handsets and upgrading their network is so that when users have the new smartphones, they tend to consume more data. this allows them to push up revenue per user. right now they are in the investment states. that will pay off. analysts have the profit ready to double next year over what the previous estimate was. it looks like it will pay off in the future. >> nestle, slowing growth in emerging markets, pressure in europe. revenue will rise about 3.5% on an organic basis. sales growth for the first nine months of the year came in below analyst estimates. are you concerned about the health of growth now than you were six months ago? growths a low
deflationary environment low material prices that stay longer low. that is what is reflected in our figures. what is behind this is that we are growing in volume. that is what we have privileged and this low pricing environment. the higher end of the industry, that is what matters. the global environment is slow growth for quite a while. up veryis going to pick slowly. hence our projection for the year. >> microsoft shares going over 6% in extended trading. the windows company better-than-expected results buoyed by demand for software and services. they have been investing in data centers and striking partnerships to bolster sales of their main margaret products
like office 365. how is the turnaround plan going? >> it looks good. we have seen increasingly improving results on the top line. the company continues to be a prophet and free cash flow machine. we see revenue growth, and revenue is growing at a faster and faster rate. that is where we want to be. making big changes while continuing to have some success with windows and office. >> we're looking at numbers from erickson. we have those numbers coming through. of 33.3lion, net loss billion swedish krona. that looks to be a little worse than expected. joining the throng of those calling for a new ceo to be found quickly for the swedish network equipment maker. >> is the company for sale?
>> as far as i know, the company is not for sale. it is strongly supported by long-term owners. 181re present in countries. we had a challenging quarter, and we will have to manage that in a good way. we will have to do the things we can control, efficiency and cost. >> earnings this morning, ge cutting 2016 forecast and honeywell posting its first profit dropped since 2011. >> were there surprises? >> i don't think there was a big surprise. they lowered organic growth. given the decline of the first half, they were not going to make it. and makes a lot more sense. declines were less worse in oil and gas. there were not a lot of
favorable news. >> the honeywell earnings. they gave us a preview recently. he did not surprise much in the third quarter. they told us what was going to happen. what did we learn? >> we learned they are not getting the volume. they have already done a lot of the restructuring. they have got to have some organic growth to get some bottom-line growth. it is not happening with most of these companies. ♪
this is really cool. you can actually see what companies have been issuing for guidance. this is a great way to summarize where those corporate executives are giving projections. they're keeping cards close to the chest. >> a quick plug for the bloomberg terminal. breaking rates around the world. i have the u.s. here. we are seeing exactly what you're seeing. all of these breakeven rates are below the fed target of 2%. alix: there are about 30,000 functions on the bloomberg. we enjoy showing you are favorites. maybe they will become your favorites. here's another function you will find useful. quicgo . you can get insight into timely topics. here is a quick take from this
week. the new president of the philippines is not afraid to insult public leaders. [laughter] >> mr. obama, you're going to go to hell. >> he has made international headlines for his deadly war on crime. >> we will eliminate the druglords once and for all. >>'s expert methods have still outrage. militaryppines major ally for decades, the u.s., relations are strange. >> the philippines is made up of more than 7000 islands and 100 million people. their economy has grown faster than their major southeast asian neighbors. the country has high levels of corruption, poverty, and crime. duterte's promise to take
on the criminals that want him a landslide in the election. >> i will take on the criminals, no doubt about it. criminality, drugs, and corruption in government. hisnown as the punisher for vigilante style of approach them he thousand two stamp out crime within one year of being elected as president. 3000 suspected drug dealers were reported killed in his first three months in office. he threatened to withdraw from the u.n. >> maybe we will have to decide to separate from the united nations. >> president obama was pushed to stop a meeting with duterte. his critics see him as the biggest dictator in the philippines since her man --
ferdinand marco. >> nobody but nobody. >> a more conciliatory approach to china and russia. he has even discussed the possibility of direct talks with china over territory claims in the south china sea. the philippines 18 tribunal tribunalainst -- won a ruling against china. what remains to be seen is how much trash talk the relationship with the u.s. can withstand. alix: that was just one of the many quick takes you can find on the bloomberg. you can find them at bloomberg.com along with all the latest business news and analysis 24 hours a day. best"s all for "bloomberg
♪ >> what does her family fake? david: do they think it was something wrong with us men wanting to do computers? did you ever think your life would be better off getting a harvard degree? mr. gates: i am a weird dropout. david: as far as your relationship with steve jobs -- you were the wealthiest man for 20 years more, is that more of a burden than a pleasure? >> would you fix your time, please? david: let me move it this way. ok.